Polish National Credit Union and Premier Source Credit Union to merge

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“A real win-win”

By Mark Morris

Jim Kelly says PNCU and Premier Source offer services and expertise that benefit each other.

Polish National Credit Union started in 1921 with an investment of $325 and today has over $700 million in assets. But there are always ways to improve and expand its services, said President and CEO Jim Kelly, who describes the recently announced merger agreement between PNCU and Premier Source Credit Union as a merger of two strengths.

“Nobody at Premier Source will lose their job,” he said. “In fact, we rely on their expertise to offer credit cards to members, which is something we’re not in at this time.”

Meanwhile, faced with rising costs to keep pace with technology, compliance and talent retention, Premier Source had begun to consider a merger as the best way forward. CEO Bonnie Raymond said that after considering a number of factors, Polish National emerged as the best fit.

“As a larger organization, Polish National offers in-house mortgages and business loans, while we bring our credit card portfolio to expand to their members,” Raymond said. “In addition to the credit card business, they will benefit from the expertise of our staff, so it’s a real win-win.”

Kelly added that growing organically in the Mass West isn’t easy. That’s why he called the merger with Premier Source a “unique opportunity.” Premier Source’s current headquarters on North Main Street in East Longmeadow will become the ninth branch of Polish National, headquartered in Chicopee. This location also meets one of Kelly’s strategic goals of finding additional space.

“We’re a growing credit union, and there’s not a lot of room left at our headquarters in Chicopee or our operations center in Wilbraham,” he said. “The Premier Source building is big and beautiful, so it helps us a lot.

What became known in the United States as the Great Resignation also affected both credit unions. Between retirements and simply leaving work due to COVID-19 concerns, both organizations have felt the impact of departures. Raymond noted that the merger will help resolve staffing issues for both.

“It was another win-win as our staff will remain employed while the Polish National can call on experienced help to fill any openings they may have.”

“It was another win-win as our staff will remain employed while the Polish National can call on experienced help to fill vacancies,” she explained.

In recent years, both organizations have grown through mergers with smaller credit unions. Nationally, Kelly told BusinessWest, about one credit union per day is involved in a merger.

Strategic partnership

Premier Source began in 1941 as Kelko Credit Union, founded by employees of the Kellogg Envelope Company. Over the years, Premier Source has acquired employee credit unions from companies such as Spalding, Hasbro Games and Western Mass Electric. While membership now exceeds 4,500, Raymond said its growth still doesn’t provide the economies of scale of larger institutions.

“For example, interactive bank machines have become popular, but they are extremely expensive, and simply buying one does not recoup the investment,” she said. At $80,000 each, an institution must own multiple MTIs to achieve economies of scale.

By agreeing to the merger, Premier Source will not invest in MTIs, but its members will see a direct benefit. A common practice when a credit union merges is to pay a dividend to its members. Raymond explained that members are the reason Premier Source has a strong capital base, so the board will soon vote for a special dividend to compensate members who remain with the credit union.

“It’s a way of rewarding members for their longevity. Members who have been with us for more than 10 years will receive the biggest dividend,” she said, adding that most members have been with Premier Source for more than 10 years.

Far from being a cold, calculated business deal, Kelly said a credit union merger is generally a more personal type of transaction, done only with people who have earned their trust.

“You don’t merge with someone you met only a few months ago,” he noted. “This usually involves people you’ve known for at least several years because you want to make sure your members and employees will be taken care of post-merger.”

Kelly said he and Raymond go back a long way, having crossed paths on several occasions because they work in the same industry. “I’ve known Bonnie for a long time. He is a high quality and talented person. »

The next step in the merger process involves regulatory approval from the Massachusetts Banking Division, the National Credit Union Administration and the Massachusetts Credit Union Share Insurance Corp., as well as approval from members of both credit unions.

A recent press release suggested the merger could be completed by the spring of 2022. Kelly, a former regulator, said he would not offer a timeline as it is entirely up to regulators as to when. they will complete their work on the merger.

Healthy outlook

The Polish National ranks 174th among the country’s 200 healthiest credit unions, according to the Cooperative Credit Union Assoc. Kelly is proud of this achievement and noted that it’s good news considering there are 5,164 credit unions in the United States.

For now, the numbers Kelly is looking forward to involving Premier Source’s 4,500 members joining Polish National’s 25,000+ members. It’s a great way to start the next 100 years of the credit union,” he said.

“Although our founders are Polish, we have always been a community credit union and we will continue that tradition,” he added, noting that the quote attributed to revered TV22 meteorologist John Quill still rings true: “ you don’t need to be Polish to be a member”.

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